Prairie grain shippers and farmers have nothing to fear from the proposed merger of CN Rail and Burlington Northern Santa Fe, says a former CN executive.
Doug Campbell, an assistant vice-president at CN in the 1980s and now a consultant, says at the end of the day, the merger will benefit customers.
“I think there are significantly more pluses than minuses to this kind of proposal,” he said in an interview last week from Winnipeg.
The merger will result in a measurable increase in competition in the territory now served mainly by CP Rail, and that should be viewed as good news by rail customers.
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“CP has had a corner on the area from the Trans-Canada highway south and that has been a constant concern to shippers big and small,” said Campbell.
With BN’s lines hugging close to the Canada-United States border, and given BN’s relatively high profit margins on grain in recent years, the newly merged railway could offer significant incentives to draw grain away from CP, he said.
CN and BN announced plans last month to combine operations under a new entity to be called North American Railways Inc. If approved, the merger will likely occur in mid-2001.
Campbell said the new railway should gain significant operational and administrative efficiencies that can be passed back to shippers.
“They’re both so big and the industry is changing so much that this just allows them to shed costs faster. When all is said and done, we should have a system that is more reliable and lower cost.”
Some grain industry officials have expressed dismay at the proposed merger, saying they had been looking to BNSF to provide some competition to Canadian railways under joint running rights.However Campbell said it’s highly unlikely that would have happened anyway, since all major railways dislike the idea of open access.
“I would suggest there’s almost a pact amongst the big guys that they wouldn’t attack each other,” he said, adding that open access provisions would more likely be used by short-line companies.
